News Non-Life15 Dec 2017

Australia:Cladding will cause problems for insurers

| 15 Dec 2017

The widespread use of combustible cladding on the exterior of highrise and commercial buildings in Australia will create difficulties for property, public liability and professional indemnity insurers in 2018, predicts the global law firm Clyde & Co.

In its insurance predictions for 2018, the law firm says that regulatory audits to identify buildings with unsafe cladding are well advanced in most Australian states, with the results of those audits expected to start being released early next year.

Mr Marcus O'Brien of the Melbourne office of Clyde & Co, said: “Where unsafe cladding is detected, building owners, particularly strata corporations for high rise residential towers, will be looking to claim cladding replacement costs from the builders, design consultants and certifiers involved in the design and construction of the buildings.

“The property and public liability insurers of such buildings will face increased risks of claims until the cladding is replaced. There will also be increased claims by building professionals under their professional indemnity policies.”

In a related development, the Victorian government announced another cladding audit would take place over the next year after the Victorian Cladding Taskforce revealed 1,369 buildings "likely" had combustible cladding. Each building will be given a danger rating from 'low' to 'extreme'. The taskforce will also announce a "rectification tool" to help residents address the problem.



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